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Thursday, 16 October 2014

Plan to hive off sick PSUs’ real estate

The government is considering a proposal to hive
off real estate owned by sick public sector companies in Mumbai,
Kolkata, Pune and Ahmedabad to state-owned National Buildings and
Construction Corporation (NBCC), before selling off the chronically
loss-making entities.

Senior government officials told TOI that NBCC, which is developing
real estate in the national capital, has shown interest in prime plots
owned by companies such as Bengal Chemicals, National Bicycle
Corporation and Richardson & Cruddas in Mumbai’s Worli and Byculla.

Similarly, in Kolkata, the company is looking at land owned by NJMC
as well as state-government entities such as Lilly Biscuits and West
Bengal Warehousing Corporation.

When contacted, NBCC chairman and MD Anoop Kumar Mittal confirmed
that his company has written to the disinvestment department and the
Board for Reconstruction of Public Enterprises to enter into a
partnership with some of the loss-making PSUs. “Our interest goes beyond
metros as we also want to look at tier-II cities,” Mittal said, but
refused to discuss the issue further.

Separately, the company has initiated a dialogue with some of the
companies to develop land. Government officials said NBCC has suggested
various models, including direct sale of land and even joint ventures
for the development of real estate. There are also suggestions of a
holding company model, which will bring the sick companies under its
fold, along with the staff and other assets and liabilities.

“It is something that we are considering but there is no decision on the issue,” an official said.

The government is keen on maximizing its disinvestment receipts and
is looking at various ways to maximize its mop-up to meet the stiff Rs
48,000 crore target fixed by finance minister Arun Jaitley for the
current financial year. Although the BJP government is continuing with
the UPA’s disinvestment policy, it has not ruled out looking at
strategic sale in profit-making PSUs as well.

Under the policy approved by the UPA, loss-making PSUs were to be put
on the block but it’s a different matter that no action was initiated
for a decade. But, before these companies are sold, the government will
want to sell off its real estate so that it is not accused of handing
over prime property at throwaway prices. Analysts, however, say that
there may not be many takers for the sick companies minus the real
estate.